VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 14, 2012) - Terrace Energy Corp. (TSX VENTURE:TZR) (the "Company" or "Terrace") is pleased to provide the following operational update:
Cutlass - Eagle Ford Project
The Company has made significant progress on initiating its "Cutlass Project" in Dimmitt and LaSalle Counties, TX. Access roads, water wells and the drilling pad for the West #1A drilling location are completed. Pioneer Rig #28 has been moved onto the Company's leases and drilling has commenced on the first of its two planned horizontal wells. The well is currently at intermediate pipe depth of 7200' and the Company is preparing to run 9 5/8" casing. Plans are to drill a vertical pilot hole to evaluate the cretaceous section, then turn the well horizontal and drill approximately 4500 of lateral section in the Eagle Ford Formation at approximately 8000' TVD.
Construction of the East #1 drilling pad for the Company's second well in LaSalle County is approximately 75% complete. The Company plans to move Rig #28 to this drilling project immediately after concluding the drilling phase of the West #1A well. Access roads and other infrastructure built in conjunction with the West #1A will be used to service this location as well as further drilling on both the Dimmitt County and LaSalle County leases.
The Company owns a 30% working interest and 22.5% net revenue interest in the Cutlass Project. The project is situated within an area of extremely high activity for Eagle Ford Oil development. The Company's leases are completely surrounded by property under lease to Anadarko Petroleum as well as several other active Eagle Ford developers in the immediate vicinity. There are numerous active drilling rigs as well as completion, production and infrastructure construction projects actively underway in the immediate vicinity of the Company's leasehold.
The Cutlass Project has the potential to support up to 28 drilling locations targeting the Eagle Ford formation as well as the potential to develop additional cretaceous horizons which are productive in the region.
STS Olmos Project
The Company has initiated the second phase of its Olmos Horizontal Development Project in McMullen and LaSalle Counties Texas, following up on its successful initial well, the STS 1-667H. The operator has mobilized the Patterson UTI Rig #23 to its SP5 1-47H location in McMullen County. The Company plans on drilling two horizontal wells from this location in order to optimize equipment utilization and infrastructure costs. The wells will be drilled "back-to-back" and completed simultaneously. The Company expects to enjoy significant cost savings by using this approach, as well as optimizing the time to first production from these two drilling projects. The SP5 1-47H well was spud on May 11th.
Production from our STS 1-667H well continues to meet the Company's pre-drill expectations and continues to flow at rates in line with industry published decline curves. The well has accrued net cash flow exceeding 40% of its capital expenditure within the first 90 days of production. There can be no assurance that the flow rate will stabilize at current levels over time.
Terrace holds a 33.33% working interest (25% NRI) in each of the two current drilling projects in addition to a 16.9% working interest (12.65% Net Revenue Interest) in the STS 1-667H well.
The STS Olmos Project covers approximately 14,400 gross acres (3,875 net acres) in the LaSalle and McMullen Counties, Texas and has the potential to support up to 60 or more offset drilling locations.
Currently budgeted capital expenditures are fully provided for with the $10 million available to the Company from its recently completed private placement.
About Terrace Energy
Terrace Energy is an oil & gas development stage company that is focused on unconventional oil extraction in onshore areas of the United States. It currently has two principal properties situated in Texas with targets in the "Olmos" oil and "Eagle Ford" oil formations.
For further information, please visit the Company's website at www.terraceenergy.net.
APPROVED BY THE BOARD OF DIRECTORS
Dave Gibbs, President
Certain of the statements made in this news release may contain forward-looking statements within the meaning of the United States Securities Exchange Act of 1934 and forward-looking information within the meaning of applicable Canadian securities law. Forward-looking statements and forward-looking information include, but are not limited to statements or information with respect to the timing of exploration drilling and the potential for the Company's projects to support additional drilling locations. Users of forward-looking statements and forward-looking information are cautioned that actual results may vary from the information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking statements and forward-looking information contained in this press release include lack of availability of goods and services, regulatory changes and all of the other risks and uncertainties normally associated with the exploration for and development and production of oil and gas. The forward-looking statements and forward-looking information contained in this press release represents management's best judgment of future events based on information currently available. The material assumptions used to develop the forward-looking statements and forward-looking information include that necessary goods and services will be available on reasonable terms, that regulatory requirements will not change in any material respect and that other aspects of the Company's operations will not be affected by unforeseen events. The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.
Terrace Energy Corp.